PDF Solutions, Inc.'s (NASDAQ:PDFS) one-year returns climbed after last week's 4.6% gain, institutional investors must be happy
If you want to know who really controls PDF Solutions, Inc. (NASDAQ:PDFS), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 70% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And things are looking up for institutional investors after the company gained US$52m in market cap last week. One-year return to shareholders is currently 5.3% and last week’s gain was the icing on the cake.
In the chart below, we zoom in on the different ownership groups of PDF Solutions.
Check out our latest analysis for PDF Solutions
What Does The Institutional Ownership Tell Us About PDF Solutions?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors have a fair amount of stake in PDF Solutions. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at PDF Solutions' earnings history below. Of course, the future is what really matters.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in PDF Solutions. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 12% of shares outstanding. With 8.2% and 6.7% of the shares outstanding respectively, Invesco Ltd. and John Kibarian are the second and third largest shareholders. John Kibarian, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.
We did some more digging and found that 9 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of PDF Solutions
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that insiders maintain a significant holding in PDF Solutions, Inc.. It is very interesting to see that insiders have a meaningful US$142m stake in this US$1.2b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over PDF Solutions. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for PDF Solutions that you should be aware of before investing here.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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